UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the quarterly period ended: September 30, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE

ACT OF 1934

For the transition period from _____to ______

Commission File Number: 001-41575

Lipella Pharmaceuticals Inc.

(Exact name of registrant as specified in its charter)

Delaware		20-2388040
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

7800 Susquehanna St., Suite 505

Pittsburgh, PA 15208

(Address of principal executive offices) (Zip Code)

(412) 894-1853

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 13, 2025, there were 4,620,837 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.

Lipella Pharmaceuticals Inc.

Form 10-Q

September 30, 2025

Table of Contents

		Page
Part I	FINANCIAL INFORMATION	1

Item 1	Financial Statements.	1

	Condensed Balance Sheets as of September 30, 2025 (Unaudited) and December 31, 2024	1

	Condensed Statements of Operations (Unaudited) for the Three Months and Nine months Ended September 30, 2025 and 2024	2

	Condensed Statements of Changes in Stockholders’ Equity (Deficit) (Unaudited) for the Three and Nine months Ended September 30, 2025 and 2024	3

	Condensed Statements of Cash Flows (Unaudited) for the Nine months Ended September 30, 2025 and 2024	4

	Notes to Condensed Financial Statements (Unaudited)	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	27

Item 4.	Controls and Procedures.	27

Part II.	OTHER INFORMATION	28

Item 1.	Legal Proceedings.	28

Item 1A.	Risk Factors.	28

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	29

Item 3.	Defaults upon Senior Securities.	29

Item 4.	Mine Safety Disclosures.	29

Item 5.	Other Information.	29

Item 6.	Exhibits.	30

	Signatures	31

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

Lipella Pharmaceuticals Inc.

CONDENSED BALANCE SHEETS

	September 30, 2025
	(unaudited)			December 31, 2024
Assets
Current Assets
Cash and cash equivalents	$	1,855,771		$	2,184,863
Grants receivable		—			84,713
Prepaid expenses		223,517			347,676
Total Current Assets		2,079,288			2,617,252
Property and Equipment
Furniture, fixtures and equipment		140,294			140,294
Furniture, fixtures and equipment (Accumulated Depreciation)		(132,595	)		(130,430	)
Furniture and fixtures, net		7,699			9,864
Other Assets
Operating lease right of use asset		262,823			46,754
Total Assets		2,349,810			2,673,870
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable		462,892			388,191
Accrued expenses		34,938			237,886
Operating lease liability		44,267			47,605
Payroll liability		100,302			80,735
Total Current Liabilities		642,399			754,417
Operating lease liability, net of current portion		219,816			—
Total Liabilities		862,215			754,417
Stockholders’ equity:
Preferred stock, $0.0001 par value per share, 20,000,000 shares authorized;
Series B preferred stock, $0.0001 par value per share, 72,000 shares authorized; 1,260 shares issued and outstanding at September 30, 2025 and 25,975 shares issued and outstanding at December 31, 2024	$	1		$	3
Series C preferred stock, $0.0001 par value per share, 1,050,000 shares authorized; 0 shares issued and outstanding at September 30, 2025 and 303,041 shares issued and outstanding at December 31, 2024		—			30
Common stock, $0.0001 par value per share, 200,000,000 shares authorized, 4,620,837 shares issued and outstanding at September 30, 2025 and 1,208,919 shares issued and outstanding at December 31, 2024		462			121
Additional paid-in capital		20,715,326			17,259,406
Accumulated deficit		(19,228,194	)		(15,340,107	)
Total stockholders’ equity		1,487,595			1,919,453
Total liabilities and stockholders’ equity	$	2,349,810		$	2,673,870

The accompanying notes are an integral part of these condensed financial statements.

Lipella Pharmaceuticals Inc.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)


	For the three months ended September 30,						For the nine months ended September 30,
	2025			2024			2025			2024
Grant revenues	$	—		$	80,380		$	216,117		$	362,691
Total revenues		—			80,380			216,117			362,691

Cost and expenses
Research and development		720,973			1,046,693			2,506,029			2,550,851
General and administrative		553,299			493,102			1,668,756			1,441,090
Total costs and expenses		1,274,272			1,539,795			4,174,785			3,991,941
Loss from operations		(1,274,272	)		(1,459,415	)		(3,958,668	)		(3,629,250	)

Other income (expense)
Interest income, net		20,194			14,778			70,581			54,658
Total other income/(expense)		20,194			14,778			70,581			54,658
Loss before income taxes		(1,254,078	)		(1,444,637	)		(3,888,087	)		(3,574,592	)
Provision for income taxes		—		$	—			—		$	—
Net Loss	$	(1,254,078	)	$	(1,444,637	)	$	(3,888,087	)	$	(3,574,592	)

Loss per share of Common Stock
Basic		(0.28	)		(1.29	)		(1.07	)		(3.60	)
Dilutive		(0.28	)		(1.29	)		(1.07	)		(3.60	)

Weighted-average of shares of Common Stock outstanding:
Basic		4,549,120			1,119,129			3,646,185			994,252
Dilutive		4,549,120			1,119,129			3,646,185			994,252

The accompanying notes are an integral part of these condensed financial statements.

Lipella Pharmaceuticals Inc.

CONDENSED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)


	Series B Convertible Preferred Stock						Series C Convertible Preferred Stock						Common Stock				Additional paid-			Accumulated
	Shares			Amount			Shares			Amount			Shares		Amount		in capital			Deficit			Total
Balances, December 31, 2023		—		$	—			—		$	—			756,745	$	75	$	13,468,216		$	(10,323,843	)	$	3,144,448
Net loss		—			—			—			—			—		—		—			(1,191,809	)		(1,191,809	)
Share based compensation		—			—			—			—			—		—		208,639			—			208,639
Warrants converted to Common Stock		—			—			—			—			62,500		6		(6	)		—			—
Issuance of Common Stock		—			—			—			—			36,227		4		199,996			—			200,000
Shares issued for services		—			—			—			—			24,510		3		199,997			—			200,000
Balances, March 31, 2024		—			—			—			—			879,981		88		14,076,842			(11,515,652	)		2,561,278
Net loss		—			—			—			—			—				—			(938,146	)		(938,146	)
Share based compensation		—			—			—			—			—				80,666			—			80,666
Warrants exercised for shares of Common Stock		—			—			—			—			70,724		7		(7	)		—			—
Balances, June 30, 2024		—		$	—			—		$	—			950,705	$	95	$	14,157,501		$	(12,453,799	)	$	1,703,798
Net loss		—			—			—			—			—		—		—			(1,444,637	)		(1,444,637	)
Issuance of Common Stock and warrants, net of issuance costs of $468,588		—			—			—			—			49,875		5		820,327			—			820,332
Share based compensation		—			—			—			—			—		—		379,425			—			379,425
Warrants converted to Common Stock		—			—			—			—			90,625		9		(9	)		—			—
Balances, September 30, 2024		—		$	—			—		$	—			1,091,205	$	109	$	15,357,244		$	(13,898,436	)	$	1,458,918

Balances, December 31, 2024		25,975		$	3			303,041		$	30			1,208,919	$	121	$	17,259,406		$	(15,340,107	)	$	1,919,453
Net loss		—			—			—			—			—		—		—			(1,306,523	)		(1,306,523	)
Warrants exercised for Common Stock		—			—			—			—			64,702		6		(6	)		—			—
Series B preferred stock converted to Common Stock		(25,975	)		(3	)		—			—			972,149		97		(94	)		—			—
Series C preferred stock converted to Common Stock		—			—			(303,041	)		(30	)		303,041		30		—			—			—
Issuance of warrants to purchase Series B preferred stock		—			—			—			—			—		—		9,000						9,000
Issuance of preferred stock and warrants, net of issuance costs of $382,800		46,025			5			536,959			53			—		—		3,457,216			—			3,457,274
Balances, March 31, 2025		46,025			5			536,959		$	53			2,548,811	$	254	$	20,725,522		$	(16,646,630	)		4,079,204
Net loss		—			—			—			—			—		—		—			(1,327,486	)		(1,327,486	)
Series B preferred stock converted to Common Stock		(44,765	)		(4	)		—			—			1,535,067		154		(149	)		—			—
Series C preferred stock converted to Common Stock		—			—			(383,517	)		(38	)		383,517		38		—			—			—
Issuance costs		—			—			—			—			—		—		(10,047	)		—			(10,047	)
Balances, June 30, 2025		1,260		$	1			153,442		$	15			4,467,395	$	446	$	20,715,326		$	(17,974,116	)		2,741,672
Net loss		—			—			—			—			—		—		—			(1,254,078	)		(1,254,078	)
Series C preferred stock converted to Common Stock		—			—			(153,442	)		(15	)		153,442		15		—			—			—
Balances, September 30, 2025		1,260		$	1			—		$	—			4,620,837	$	462	$	20,715,326		$	(19,228,194	)		1,487,595

The accompanying notes are an integral part of these condensed financial statements.

Lipella Pharmaceuticals, Inc.

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)


	The nine months ended
	September 30,
	2025			2024
Cash flow from operating activities:
Net loss	$	(3,888,087	)	$	(3,574,592	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		2,165			2,165
Shares issued for services		—			200,000
Non-cash stock option expense		—			668,730
Changes in operating assets and liabilities:
Operating right of use asset		409			(173	)
Grants receivable		84,712			1,207
Prepaid expense		124,160			(591,895	)
Accounts payable		74,701			321,437
Accrued expenses		(202,948	)		12,490
Payroll liability		19,567			297
Net cash used in operating activities		(3,785,321	)		(2,960,334	)
Cash flow from investing activities:
Net cash used in investing activities		—			—
Cash flow from financing activities:
Proceeds from issuance of common stock, preferred stock, and/or pre-funded warrants, net of issuance costs		3,456,228			1,020,332
Net cash provided by financing activities		3,456,228			1,020,332
Net decrease in cash, cash equivalents		(329,093	)		(1,940,002	)
Cash, and cash equivalents at beginning of period		2,184,863			3,293,738
Cash, and cash equivalents at end of period	$	1,855,770		$	1,353,736

Supplemental disclosure of cash flow information:
Interest Paid	$	(11,263	)	$	(11,908	)
Income taxes paid		—			—

The accompanying notes are an integral part of these condensed financial statements.

Lipella Pharmaceuticals Inc.

NOTES TO CONDENSED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Description of Business and Basis of Presentation

Nature of Business

Lipella Pharmaceuticals Inc. (the “Company”, “we”, “us” or “our”) is a clinical-stage biotechnology company focused on developing new drugs by reformulating the active agents in existing generic drugs and optimizing these reformulations for new applications. Our operations consist of research, preclinical development and clinical development activities, and our most advanced programs are in Phase 2 clinical development. Since our inception in 2005, we have historically financed our operations through a combination of federal grant revenue, licensing revenue, manufacturing revenue, as well as equity and debt financing.

Basis of Presentation

The Company’s unaudited condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to the authoritative GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) of the Financial Accounting Standards Board.

In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly the Company’s financial position, results of operations, and cash flows. The interim results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to instructions, rules, and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). The unaudited condensed interim financial statements should be read in conjunction with the audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2024, which was filed with Securities and Exchange Commission (“SEC”) on March 28, 2025 (our “Annual Report”).

Note 2. Going Concern

The accompanying unaudited condensed financial statements have been prepared in conformity with GAAP, which contemplate continuation of the Company as a going concern. The Company has not established a source of revenues sufficient to cover its operating costs and will require significant additional capital to continue its research and development programs, including progressing clinical product candidates to commercialization and preparing for commercial-scale manufacturing and sales.

The Company’s net loss for the nine months ended September 30, 2025 and fiscal year ended December 31, 2024 was $3,888,087 and $5,016,264, respectively. Since inception, the Company has incurred historical losses and has an accumulated deficit of $19,228,194 at September 30, 2025 and $15,340,107 at December 31, 2024, respectively. At September 30, 2025, the Company had available cash and cash equivalents of $1,855,771 and net working capital of $1,436,889. The Company anticipates operating losses to continue for the foreseeable future due to, among other things, costs related to: research, development of product candidates, conducting preclinical studies and clinical trials, and administrative organization. These funds, and our funds available under existing government contracts, may not be sufficient to enable us to meet its obligations as they come due for a period of one year after the issuance date of these unaudited condensed financial statements.

If the Company is unable to obtain additional capital (which is not assured at this time), its long-term business plan may not be accomplished, and the Company may be forced to curtail or cease operations or file for bankruptcy protection or pursue a dissolution of the Company and liquidation of all of the Company's remaining assets. These factors individually and collectively raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying unaudited condensed financial statements do not include any adjustments that may result from this uncertainty.

Note 3. Summary of Significant Accounting Policies

The Company’s significant accounting policies are described in Note 3, “Accounting Policies,” in the Annual Report. There have been no material changes to the significant accounting policies during the three-month period ended September 30, 2025, except for items mentioned below.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of these unaudited condensed financial statements. Actual results could differ from those estimates.

Adoption of New Accounting Pronouncements

During the three months ended September 30, 2025, no new accounting pronouncement was issued or became effective that had, or is expected to have, a material impact on these unaudited condensed financial statements.

Concentration of Credit Risk

The Company’s grant revenues and grant receivables are from the National Institute of Health (the “NIH”). The NIH is an agency of the United States Department of Health & Human Services, and the Company believes amounts are fully collectible from this agency. Contract revenues were $216,117 for the nine months ended September 30, 2025, all of which have been collected, and $0 for the three months ended September 30, 2025.

Earnings Per Share

Basic net loss per share of common stock of the Company, par value $0.0001 per share (the “Common Stock”), is computed by dividing the net loss for the period by the weighted-average number of shares of Common Stock outstanding during the period. Diluted net loss per share of Common Stock is computed giving effect to all dilutive Common Stock equivalents, consisting of stock options, preferred stock, and warrants. Diluted net loss per share of Common Stock for the three and nine months ended September 30, 2025 and 2024 is the same as basic net loss per share, as the Common Stock equivalents were anti-dilutive due to the net loss.

At September 30, 2025 and 2024 the Common Stock equivalent shares were as follows:


	September 30,
	2025		2024
Shares of Common Stock issuable upon exercise of options		361,624		361,624
Shares of Common Stock issuable upon exercise of warrants		415,974		331,921
Shares of Common Stock issuable upon conversion of Series B preferred stock		53,096		—
Shares of Common Stock issuable upon conversion of Series C preferred stock		—		—
Shares of Common Stock issuable upon exercise of Warrants for Series B preferred stock and subsequent conversion to Common Stock		3,333,319		—
Common Stock equivalents excluded from diluted net loss per share		4,164,013		693,545

Note 4. Fair Value Measurements and Marketable Debt Securities

In accordance with ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), the Company measures its assets and liabilities at fair value. We apply the three-level valuation hierarchy as described in ASC 820, which is based upon the transparency of input as of the measurement date. The three levels of inputs as defined are:

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instruments.

Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair value measurement.

At September 30, 2025 and December 31, 2024, the Company’s financial instruments consist primarily of: cash and cash equivalents, accounts payable and accrued liabilities. For cash equivalents, accounts payable and accrued liabilities, the carrying amounts of these financial instruments as of September 30, 2025 and December 31, 2024 were considered representative of their fair values due to their short term to maturity.

The Company held no marketable securities at September 30, 2025 and December 31, 2024. For cash equivalents at September 30, 2025 and December 31, 2024, the fair value input levels are summarized below:

September 30, 2025	Level 1		Level 2		Level 3		Total
Cash Equivalents (maturity less than 90 days)
Commercial Paper	$	—		—		—	$	—
U.S. Government		—		—		—		—
Money market funds		1,733,336		—		—		1,733,336
Total Cash equivalents		1,733,336		—		—		1,733,336

Marketable Securities		—		—		—		—
Total Cash Equivalents and Marketable Securities	$	1,733,336		—		—	$	1,733,336

December 31, 2024

SEC Form 10-Q filed by Lipella Pharmaceuticals Inc.